One of the premier and common considerations when trying to protect and grow your wealth is how to find and buy the best stocks. Stock investing involves the following considerations
1) Methodology of increasing the amount of capital available to invest.
2) Methodology of managing the money you do have when making a decision so you have enough cash.
3) Methodology of determining how many stocks to buy and how much money goes into each one.
4) Methodology of vehicle selection or selecting which specific stocks to buy. (How to find the best stocks to buy)
5) Methodology for when to buy those stocks and how to identify these buypoints
6) Methodology for when to cut losses if the trade goes against you
7) Methodology for when to take gains when trade goes well 
Methodology for when to end the trade if the stock is neither performing well enough to take gains, or poorly enough to cut losses.
9) Mentality for investing
10) Conclusion
These are many considerations, and I could probably write a short book on each of these methods, but I am going to do it in under 1000 words starting now.
1) Methodology of increasing the amount of capital available to invest
Increasing the amount of capital to invest can be easy, but it is a matter of habit, and if you don’t have the habit formed already it isn’t easy metally and emotionally even though it’s simple in concept. You want to have all your bills paid for, all your expenditures, and 6 months worth of savings in cash saved before hand, then the left over money can go into investing. Howeve, one idea for making certain that you actually stay disaplined in investing, is stay disaplined in your expenditures. The way to force yourself to invest 10% of your income, is to take the 10% of your income first for investing, 10% for tithing, and 10% for fun or for a vacation or whatever your goal. If you can’t do 10% start with 1% and gradually begin to cutback on expenses, or take on an extra job, extra hours, or some freelance work, until you can reach that 10%. Paying off credit card debt can be a valuable investment, as you could be paying 20% interest, and getting rid of that debt means essentially a 20% investment and even better is the ability to maintain a clear head and mentality towards money.
2) Methodology of managing the money you do have when making a decision so you have enough cash in your investment account.
You should always have enough cash on the sideline. This is a mistake that I and many others have made initially when starting. Buffett never makes this mistake.
For this, look at the Kelly criterion and take a conservative estimate such as investing one half of the kelly after conservatively estimating it.
3) Methodology of determining how many stocks to buy and how much money goes into each one.
I keep this limited to 5 or less and take a more focused approach. If your best idea and 2nd and 3rd best ideas have money investing it, putting money into your 4th and 5th idea has got to be a mistake. Plus it cost more in fees. If you don’t have enough cash on the side or don’t know the difference, perhaps it’s not, but keep it limited to 5.
Put twice as much money into the one that first reaches breakout by setting the stop buy order at the breakout point for all of them so you invest 20% of your total investment capital to each of 5 and immediately change your order to 10% of your total investment capital after the first one is bought.
Also, put twice as much money into the stock that performs well early. Other than that divide the money evenly.
4) Methodology of vehicle selection or selecting which specific stocks to buy. (How to find the best stocks to buy)
Look for high tight flags. These are proven to work in my own studies as well as others. You will use a stock screener to find these. Then you will manually look at the charts and identify them on your own.
5) Methodology for when to buy those stocks and how to identify these buypoints
You will identify 1 buypoint above the current downtrend line, and a second above the previous high. You can identify these buypoints by drawing a line Typically with daily intervals there should be a line that is touched by the stock price multiple times over a period of around 2-4 weeks. Typically 3-5 weeks is the length of time that you will see the stocks reach the 2nd buypoint.
6) Methodology for when to cut losses if the trade goes against you
The standard method is setting a hard stop at 8% but having a mental stop at 5%. So if the stock goes below 5% you consider selling, but only if it looks as if it will close the day below that level.
7) Methodology for when to take gains when trade goes well
in 3 weeks if the stock is not above 20% you should set a limit sell order at the 20% mark. If it is above 20% you should set a stop sell order at around 15%.
Methodology for when to end the trade if the stock is neither performing well enough to take gains, or poorly enough to cut losses.
The majority of high tight flags hit their target point fast and then fall sharply afterwards. There is no sense in holding a stock for longer than 6 weeks, if it does not reach it’s target in 3 weeks. When tested, just over 50% of high tight flags have reached there high in 3 weeks or less. In the next 3 weeks more than 20% of the stocks tested reached there highs. If the stock doesn’t reach 20% in 3 weeks it easily still could in the next 3 weeks, but after that and your money will be tied up in an asset that is underperforming realtive to the others, and you should not tie up your money so it should be sold immediately.
9) Mentality for investing
The mentality is that you are never good enough to out trade a profitable system, and you are not bigger than the market. Take it seriously. Keep a journal containing both trade logs and things you learn. Test various methods on your own. Run case studies. Improve your methods and you will do just fine.
10) Conclusion
In conclusion, a trading system that uses the above qualification has a very good chance of success and represents a great return on your investment. There are other considerations such as trading options with the flag trading system that you may want to test as well. No amount of improving yourself is enough, you always have to strive to improve yourself and your methods.
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